The rise of fintech prompts GCC investors to look to the US

The GCC, or Gulf Cooperation Council (Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman) has many advantages as a tech market. Its benefits include its comparatively high proportion of youth, and its strategic location – Dubai, which is emerging as the regional tech hub, is within a four-hour flight radius of one-third of the world’s population. It also benefits from its highly developed infrastructure, lack of taxation, and the fact that the GCC gas the highest smartphone penetration levels in the world.

However, despite these benefits, the regional tech sector is struggling to develop, and the market is severely underserved by existing tech companies. As a result, Gulf entities are investing in high-potential technology ventures abroad, with plans to ultimately benefit the domestic tech sector.

Investors in the GCC, particularly in the UAE, are showing strong interest in financial technology, or fintech. This includes peer-to-peer lending, with organisations like Dubai based Beehive Group offering individuals a way to lend money to small and medium-sized enterprises as part of a group. The typical Beehive investor deploys between 10,000 to 20,000 AED (2,700 to 5,400 USD), and sees returns of 12 percent on average. ArchOver, a similar peer-to-peer lending platform based in London, is also courting investors in the GCC. “The hunger for yield is definitely still out there,” says Angus Dent, Chief Executive of ArchOver. “People are putting money in, and they believe in our secured and insured model.”

The UAE is also set to see the introduction of a new “robo-service” by the fee-based financial advisory AES International, which will offer residents the opportunity to receive financial advice from a so-called “robo adviser”.

The introduction of these fintech services highlights that the high level of demand for innovative technology in the GCC is not currently being met. GCC investors are deploying capital into well-developed tech markets like the US in order to meet this demand more adequately.

On October 4th, 2016, in Dubai, Naseba will be organising the US Tech Investment Meeting, where pre-screened Middle Eastern investors will be introduced to pre-qualified tech business cases from the US.